HUNTSVILLE, Ala. (WAFF) –
Financial expert Marshall Clay is sharing six additional money management tips to help people navigate the holiday season and prepare for the new year.
This week, he focused on tax strategies, borrowing practices, and estate planning.
Tax-deferred accounts offer savings opportunities
Clay said people should take advantage of tax-deferred accounts in the new year, including company 401 (k) s, IRAs, health savings accounts for high-deductible health plans, and 529 college savings plans.
“The government has a menu of things that they’re encouraging folks to take advantage of. But what I find is that a lot of people aren’t doing that and it costs them a lot of money,” Clay said.
Borrowing guidelines and credit protection
Clay advised only borrowing money to purchase assets that appreciate, such as primary residences or investment properties. He warned against using credit cards or payment plans for holiday purchases.
“If you’re going to borrow money, only do that for maybe like a primary residence. Maybe it’s an investment property that you’re looking at. Something that gives you an opportunity for those assets to appreciate over time,” Clay said.
He emphasized protecting credit scores, noting that damaged credit affects all future lending rates, not just credit card interest.
Estate planning and insurance coverage
Clay recommended executing estate documents, including wills, powers of attorney, and health care directives. He said many people lack these documents, which can cause problems for families.
“It’s fine as long as you’re still alive, but we don’t know how long we’re all going to live,” Clay said. “Sometimes these things can sneak up on you, whether it be an illness or an unforeseen death or something like that.”
He also advised ensuring adequate insurance coverage, particularly life insurance beyond what employers typically provide.
Charitable giving strategies
Clay discussed tax-efficient charitable giving strategies, noting that recent tax law changes affect deductibility. He mentioned options like front-loading donations in one year or using donor-advised funds.
“There’s a large standard deduction now that everyone gets. And I think a lot of people are surprised to find out that a lot of their charitable giving doesn’t actually give them any sort of tax advantage,” Clay said.
Clay said successful financial planning involves making the right decisions over time rather than finding one solution.
“I go around, and I pick up pennies all day, every day,” Clay said. “It’s typically not one silver bullet thing that folks can do to kind of get them across the finish line. It’s hundreds of really good decisions over a long period of time that make a big difference.”
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